President's Column: Stop The Estate Tax Before It Stops Us

It’s that time of year again, but unfortunately, I’m not talking about the excitement of planting season. 

We’ve got to talk tax season.

As I mentioned last month, Louisiana Farm Bureau Federation will be defending agriculture’s state sales tax exemptions this legislative session and we encourage you to contact your state legislators to defend them as well.

LFBF is also entering into a battle on the national stage over another important tax for farmers and ranchers: estate taxes.

For many farmers, the ultimate dream is not fame or even fortune, but to simply pass on their farm to the next generation. It is something my brother Ross and I benefitted from, receiving land from our father better than he found it. Now that we have grown our business, we hope to afford our children and grandchildren the same opportunity to reap what we have sown.

This dream of passing a farm to the next generation is our greatest chance to maintain the American family farm. So many have the misconception that farming has gone corporate.  Despite what you may read in the headlines, more than 90 percent of our nation’s farms are family owned.

This rate of family-owned farms is being threatened by a tax rate on inheritance so overbearing, you’re disincentivized to leave your land to your children or grandchildren.

Through the Tax Cuts and Jobs Act of 2017, farmers and other citizens were given a greater ability to successfully pass on generational farmland when Congress raised the estate tax exemption cap from $5.8 million to $11.58 million.

If you are like me, all those zeroes may be difficult to put into context. Thankfully, American Farm Bureau has simplified things—the increase in Louisiana farmland value over the last 10 years has jumped 54%, with cropland jumping even higher at 63 percent. With such increases in land value, that $5.8 million exemption cap is even easier to reach in 2020 than ever before. 

What does that look like in terms of acres? With the average value of Louisiana farm land in 2020, it would only take 1,835 acres of farm real estate to meet the old cap of $5.8 million. Any acreage above that could be taxed as high as 40 percent.

Certainly not all farms are going to be bigger than 1,835 acres, but according to AFBF’s figures, this estate tax exemption increase is benefitting twice the farms than the previous exemption did, capturing another 20 percent of our state’s total acreage.

This exemption increase of the Tax Cuts and Jobs Act is now being questioned again in the 117th Congress. Regardless of the current politics, this law has a sunset provision; meaning it will only be in place until 2026, unless Congress passes a more permanent solution.

I want to see you have the opportunity to pass on your farm to your kids. The consumer has spoken clearly that they want to know where their food comes from and who grows it. These ideals are rallying points that are bipartisan. So the question will be, can Congress follow through and give the family farm a fighting chance?

I hope so. And your Farm Bureau is working to give you that fighting chance.